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Show Me the Money

Terry Mock, SLDI Co-founder

By Terry Mock
Follow Terry on Twitter: @SustainLandDev

November 2009

When Freshwater Tissue Company acquired an old shuttered pulp mill in northern California and announced intentions to convert the facility into an integrated tissue mill, producing toilet paper from sustainably managed forests and thousands of jobs by consuming by-products and disease-prone tanoak logs from the Coastal Redwood Region, the chlorine-free and carbon-neutral business plan was deemed socially, environmentally and economically sustainable by advocacy groups, forest conservation companies, educators, the Humboldt County Board of Supervisors, foresters and industry experts.

So, it was disappointing to see the latest news that Freshwater is closing the mill permanently because of lack of financial support from banks, private investors and federal stimulus funds. This is just one example of thousands like it. I can’t personally vouch for the business viability of this particular project, but as just about any land developer can tell you, talk is cheap. The bottom-line is that financing for good projects throughout the country is just not available right now for the kind of sustainable economic recovery we need and have been promised. Why not?

I’m reminded of the 1996 film “Jerry Maguire” when Tom Cruise’s character, suffering from stress and a guilty conscience, writes and distributes a mission statement about dishonesty in business entitled, “The Things We Think and Do Not Say: The Future of Our Business.” The famous “Show me the money!” scene epitomizes the empty values of business as usual, yet somewhat paradoxically shows that the pursuit of financial success need not be incompatible with broader goals, which must also include social and environmental value.

This lack of sustainable thinking in financial circles has not gone unnoticed by many in the industry. More than 90 percent of institutional investors questioned in a unique survey of market participants believe financial markets are now threatened by increased “moral hazard” – the belief that banks and other investors will take even more excessive risks based on implicit government guarantees – following the credit crisis bailouts than they did before it, and that fixing this must be a priority to ensure the sustainable functioning of markets. The survey, titled: “Credit Crisis: Business as usual for institutional investors” was carried out by the Network for Sustainable Financial Markets (NSFM), an international on-line network of senior, financial-market professionals and academics, AQ Research the investment research and data group, and Responsible-investor.com.

In response to our own industry’s need for sustainable thinking, SLDI is now entering the pilot phase for its unique Sustainable Land Development Best Practices System. Unlike other standards and certification programs, the SLDI Best Practices System helps to structure a triple-bottom-line (people, planet and profit) decision model that helps development projects achieve greater success in each area. We are interested in engaging participation from all stakeholders in the review of this system.

Your participation and comments are welcome.

Sustainable Financing Info
SLDI Study Provides Revealing Look at the State of the Industry
Show Me the Money Movie Video
NSFM Slide Show
NSFM Guiding Principles
Show me the money: EU divided at summit over how much climate aid to give poor nations
Himalayan states swear by Shimla Declaration over sustainable development
How Goldman secretly bet on the U.S. housing crash
Ron Paul: Let the dollar prove itself


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  • http://www.triplepundit.com/author/sldi/ Terry Mock

    UPDATE:

    NY Times
    Editorial
    On the Road to Relief
    Published: October 24, 2011

    At long last, Fannie Mae and Freddie Mac, the government-run mortgage companies, have issued new rules to allow millions of underwater borrowers, who are current on their payments, to refinance their high-rate mortgages into lower-rate loans. President Obama, who pushed for the changes, rightly emphasized the benefits in a speech on Monday in Las Vegas, a city ravaged by foreclosures. Refinancings will lower monthly payments, reduce the likelihood of default and boost consumer spending.

    What the president did not mention is that previous efforts to provide mortgage debt relief — by his administration and his predecessor’s — have all come up short…

    Real recovery, in the housing market and in the economy, will require reducing the principal balance on many underwater loans. That would help to stanch defaults and foreclosures by restoring equity to borrowers as well as lowering their payments.

    Fewer foreclosures would help to halt the decline in home values, replenishing battered property tax coffers. Restoring home equity is also crucial to getting consumers to spend again. But banks have balked at reducing principal because they don’t want to face up to the losses.

    For too long, President Obama has relied on the banks to do what’s right. That hasn’t worked. Strong political pressure and likely legislation may be the only way to get the banks to accept write downs of principal… http://www.nytimes.com/2011/10/25/opinion/on-the-road-to-mortgage-relief.html

  • tmock

    UPDATE:

    On the Mortgage Settlement: There Is No Political Solution to a Math Problem
    02/10/2012

    This week officials from the Obama administration, the banking
    regulators, and state Attorney Generals announced a settlement of claims
    stemming from the financial crisis. The nominal amount put forward as
    the cost of the settlement is $26 billion, and in return the banks will
    be released from civil claims on origination of mortgages and the
    falsification of documents in the foreclosure process, or “robosigning”.
    This caps off a month of political noise on the housing situation which
    started at the State of the Union, when the president announced a task
    force on financial fraud headed by officials from his administration as
    well as New York Attorney General Eric Schneiderman.

    An investigation, and a multi-billion dollar settlement. That sounds
    like a lot, until you put it into perspective. Here are the numbers.
    Roughly half of homeowners with mortgages are underwater, which means
    they owe more than they own, to the tune of $1 trillion or so. And
    housing values are still declining so far in this “recovery”, throwing
    more homes underwater. In terms of an investigation, the Savings and
    Loan crisis used roughly 1000 FBI investigators to uncover fraud — this
    task force taking on a crisis forty times more severe will employ 10
    FBI agents.

    There’s a reason this is so inadequate to the problem at hand. For
    the last three years, the policy has been to impose a political solution
    to a math problem. It hasn’t worked. America simply has too much
    mortgage debt to pay back… http://www.huffingtonpost.com/dylan-ratigan/mortgage-settlement_b_1267710.html?utm_source=Alert-blogger&utm_medium=email&utm_campaign=Email%2BNotifications

  • http://twitter.com/SustainLandDev SLDI

     Rooting Your Portfolio in Positive-Impact Real Estate
    November 16th, 2011
    http://www.triplepundit.com/2011/11/rooting-portfolio-positive-impact-farmland-real-estate-housing/

    State of the World Economy: The Emperor Has No Clothes
    September 1st, 2011
    http://www.triplepundit.com/2011/09/state-world-economy-emporer-clothes/

  • http://twitter.com/SustainLandDev SLDI

    NATIONAL REAL ESTATE INVESTOR
    Top Story
    Private Lenders Begin Giving Developers “Green” to Go Green(?)
    July 11, 2013

    There are many government or quasi-government options for companies that need some “green” to go green.

    But if you head over to your local private lender and say something like, “Hey, I’d like about $700,000 to put in a new energy-efficient HVAC system,” Green Choice Bank chief
    lending officer Jon Levey says you’ll hear what’s become a frequent refrain. “They say, ‘There’s this guy named Jon down at Green Choice Bank,’ ” he jokes. But he’s only half kidding. “A good portion of our referrals come from other lenders in town.” Most private lenders, finance groups, equity companies and banks simply don’t loan out or invest in green projects…. http://nreionline.com/green-real-estate-investment/private-lenders-begin-giving-developers-green-go-green#comment-1901